Glencore PLC (LSE:GLEN) is facing a growing valuation drag from its coal business as the company accelerates its pivot toward copper growth, according to RBC Capital Markets, though the Canadian bank still retains an 'outperform' rating.
Analysts believe the group’s expanding copper pipeline, targeting 1.1 million tonnes of annual production by 2029, is not being fully reflected in the share price. RBC said coal remains a significant free cash flow contributor, generating an estimated $1.4 billion in 2026, but continues to weigh on valuation multiples.
RBC argued that a spin-off of the coal division could unlock value. On its analysis, separating coal could drive a combined re-rating of up to 23%, although the broker applied a more conservative 10% uplift in its valuation. This resulted in a price target increase to 480p from 430p.
The analyst added that coal prices have stabilised near $100 per tonne, reducing the strategic importance of the division compared with 2023. At the same time, copper exposure is forecast to rise to 47% of EBITDA post-spin at spot prices..